Price Theory is the Study of the 'Language' of Economic Order!

Order in the world cannot exist without a bridge between the individual and society. Human beings are social beings. Order is the outcome of cumulative expressions of value across the whole. It is directional and representative.

The communicative vehicle used to convey value is price. If I value something more than the person who sets a certain price and I value it more than other things then I buy it. Everyone does this, and this is like a language telling those who are listening how to order things.

Price theory is a study of this 'language.' Pursuing this analogy further it is the entrepreneur who listens most skillfully and it is the capitalist who publishes what the speakers ask for. Another use of the analogy makes it clear that the reason a 'planned economy' cannot work is because that would be the same as outlawing the use of words and then expecting the language to function.

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A New Definition of Economic Equilibrium.

Equilibrium is one concept that appears universally in all economic literature. Despite the differences in the ideas about how its significance plays itself out, the equilibrium forces are too powerful to ignore, which accounts for the universal agreement.

The center of the divine economic model is a restatement of this equilibrating force. The center of the divine economy model is called the 'divine economy.' This is a new definition of economic equilibrium.

The equilibrium called the divine economy implies that things that run counter to the Will of God cannot sustain themselves. The prosperity infinitely bestowed upon mankind is inherently built in. As mankind becomes more 'in His Image' by acquiring virtues the economy will respond accordingly.

Human interventions into the economy, therefore, are actually acts of corruption within a divine institution. There is no doubt that we live in a time when people doubt that God is the All-Bountiful Provider. It is this lack of trust that tempts us to interject ourselves into the economy. Despite having imperfect knowledge and despite our obvious uncertainty of the future we delude ourselves into thinking that we are equipped to delve into the economy. There will come a time in the future when all these efforts will be seen as child's play that occurred before the promised age of maturity. The sooner we enter this age of maturity, the less turmoil and suffering for all.

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An Unsurpassed Definition of Economic Intervention.

One way of understanding intervention is to see how and where it appears. Using the divine economy model a straightforward definition of intervention, one that has not appeared in the economic literature yet, can be set forth.

Intervention is anything that disrupts the order (the market), the transformation (the capital structure), the law (property rights) or the human spirit (purposeful action).

Intervention hampers the flow of information, alters the perceived time horizon, weakens human rights, and discourages the human spirit. But the incredible force in the economy known as the tendency towards equilibrium makes all these consequences of intervention ephemeral. The moment intervention is stopped the economy heals itself. Then information flows, the time horizon dawns, human rights return, and prosperous encouragement of the human spirit reigns.

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Eminent Domain Laws Violate Property Rights!

In the first edition of my first book I did not discuss taxation however I will occasionally touch on this subject in this blog. Taxation is an act of intervention, imposed upon the divine economy, and so it impacts all of the cardinal 'petals' of the divine economy model.

To demonstrate how pervasive and complex are the effects of taxation let us consider eminent domain. Initially taxes are taken from individuals. (This coercive act is a source of grief to the human spirit otherwise it would be voluntarily sent in as a contribution!) Once these taxes form the revenue of the government the assumption is that it pays for services rendered, not for a pool of funding to be used to motivate the government to expand itself and to confiscate people's property.

Eminent domain laws violate property rights. It is a narrowly defined type of taxation directed specifically at owners of pieces of property desired by the government for its purposes. It is such a severe tax that it physically removes the individual from their property. The net tax is the difference between the real market price and the 'fair market price' given by the government. If the property is not on the market because it has great intrinsic value to the owner then this tax, eminent domain, is extremely high.

Property rights are human rights. Laws that actually serve justice protect property rights. Eminent domain 'laws' violate human rights, nor do they serve justice. Eminent domain law is a misnomer and is used by government to confiscate property. By using eminent domain laws the government makes confiscation legal, nevertheless, it is unjust.

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Capital is the Most Limiting Factor!

One of the reasons why primitive thinkers, like Marx, didn't identify capital as a vital economic element is because capital is not an independent productive factor like land and labor. But life is more complex than that, with manifold subtleties and nuances. Humans are not merely the physical frame!

Although not an independent productive factor capital is unmistakably of great significance. In fact capital is the most limiting factor in the economy!

There are two imperceivable qualities, to those who lack vision, that are inherent in capital. First, there is the human spirit which motivates humans to act and act in ways that lead to continual improvement. The human operating system is divine and it is ever-advancing towards its infinitely great Creator, knowingly or unknowingly, and irresistably. Second there is time, the elusive economic element that is efflorescently full of uncertainty.

There are those who want to contain all this in an imaginary form; they play games with definitions of human beings and with time so they can devise equations. They make the same errors as Marx!

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Social Cooperation Brings about Civilization.

Once individuals express their subjective choices through action it becomes a part of the social nature of humanity. And it is true that humans are social creatures.

The market is the social expression of the subjective choices of all of the individuals belonging to that civilization. We are now living in the era where the civilization is worldwide.

The market is an expression of social cooperation and it is this social cooperation that brings about civilization.

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Entrepreneurial Action Advances Intertemporal Prosperity.

One of the major features of the divine economy model is the immersion of its modus operandi in the matrix of latent and active entrepreneurship. This step of the model is described as the "Driving Force of the Divine Economy Model."

It is true that entrepreneurship operates effectively to facilitate transformation, based on information provided from the market process. This action taken then serves as information and knowledge for the next round of perception and action.

This leads to a discussion of the intertemporal effects of entrepreneurship. Symbolically, the divine economy model axis can be visualized as moving to the right, representing an ever-advancing civilization. By definition, in the model, then both justice and unity are advanced as well by active entrepreneurship.

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Prosperity of Expression Leads to Prosperity!

The divine economy, one that is uncorrupted by human intervention, allows the greatest expression of the human spirit. It is within such an encouraging environment that the unique talents and faculties of the individual prosper, which is conveyed speedily throughout the economy by the potent elements which are described in the divine economy model. Then the prosperity of expression translates further and undergoes transformation such that it causes prosperity for the entire system.

The further translation of prosperity is another way of stating that knowledge and the flow of knowledge in the system stimulates others and other processes. The transformation that radiates from the individual's prosperity of expression happens as a result of alert action by entrepreneurs and the application of capital.

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Socially, the Human Spirit is Sheltered by Laws.

There is shelter for the human spirit and that shelter takes many forms. Intellectually the human spirit is sheltered by creativity and independence. Physically the human spirit is sheltered in the human body. Socially it is sheltered by laws.

When there is an environment that encourages and supports human action the economy is operating close to its relative capacity. I speak of relative capacity since the capacity of the divine economy is ever-advancing.

Laws that encourage and support human action, and not laws that discourage or hinder human action, lead to prosperity according to the divine economy model.

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Strengthen the Laws that Protect Property Rights

The structure of the economy that brings about order is the capital structure. Amazingly it is also capital that is the transformative element, in a physical sense, as it is applied by the entrepreneurs who are alertly seeking out the needs and wants of the people.

None of these - the capital structure, capital itself, or entrepreneurial action - can function properly without the protection of law. Without protection of property rights each of these vital ingredients of the economy is stifled.

Either out of economic ignorance or from deliberate acts by persons indoctrinated in Marxist thought, many societies are continually undermining the laws that protect property rights thereby sapping the transformative power of the economy. The divine economy model clearly shows that strengthening laws that protect property rights brings about order and transformation and also justice and unity.

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Interventionism Brings About Chaos.

The order of things in the economy is not static but it is continually adjusting to meet the peoples' needs. There is, necessarily, transformation taking place all of the time.

What can be easily seen from the divine economy model is that the order that forms as a result of a response to needs has structure, and that particular structure is an intricate latticework of capital infused into the production process. Order has structure and the structure leads to order.

What is clear at this point is that capital is a cardinal element of the economy. If the structure is destroyed then order is replaced with chaos. The flow of knowledge becomes nearly impossible in a state of chaos. Thus Marxism, communism, socialism and interventionism bring chaos because they attack capital and private property thereby destroying order.

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The Market Process Moves Quickly to Bring Order.

Think about how the human spirit has a natural sense of order. Not one that is prescribed but rather one that is recognized and sought out. It is naturally a part of us since we are social beings.

It doesn't take long for systems of organization to move progressively towards those ways and means that are most beneficial and most responsive. These are the characteristics of a market - in other words - a market has emerged. And since the market is a process, it moves quickly to bring order and it will continually change for the sake of all.

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Protecting Property Rights is the Ethical Thing to do!

In the real world everything is in disequilibrium tending towards equilibrium. In the real world there is uncertainty because the future is unknown and there is limited knowledge because we are not all-knowing. Mixed together in this state of affairs is the time element and the subjective nature of human actions.

The ethics of futurity, a law of justice that needs to be in place to honor entrepreneurial service, stimulates actions that ameliorate the conditions of uncertainty in the economy. The ethics of finder's keepers, another law of justice that needs to be elucidated and upheld, facilitates discovery which lessens the impact of and narrows the margin between what is known and what is unknown.

Because these creative acts of the entrepreneur originate within and can be directly attributed to the entrepreneur they constitute part of his/her property rights. Protecting these property rights is the ethical thing to do!

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The Ethics of Entrepreneurship.

If you discover something, say, you are walking along a creek and you find a stone that has an interesting shape, this rightful pleasure is justly yours. This is the ethics of 'finder's keepers' and it applies to entrepreneurship.

If you happen to be one who thinks about the future, in contrast to others who are focusing on the present, and as a result you act in a manner that makes the future better, in all fairness, you deserve to be rewarded. This is the ethics of futurity and it applies to entrepreneurship.

These are aspects of justice that appear in the classical liberalism tradition but that are not yet given the respect that they deserve, in general. The divine economy model demonstrates that when justice is violated somewhere in the system, the outcome will be disunity.

The enigmatic nature of the entrepreneur and ignorance of its relevance is the reason that this type of 'just' compensation is not yet recognized. Part of the enigma comes from the fact that everyone is latently entrepreneurial but that only some are actively entrepreneurial. And part of the enigma stems from the inherent uncertainty and limited knowledge that makes some entrepreneurial actions non-fruitful. Yet without these acts of 'finder's keepers' or 'futurity' things would come to a standstill!

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The Human Spirit Aspires to Know!

What is the difference between the human being and the human spirit? A human being is a person. The human spirit is the energizing essence behind the motive to purposefully act.

From its primordial matrix of the human mind and soul the human spirit aspires to know. This is why the axis around which all things revolve in the divine economy model is the 'nature and role of knowledge.' Its nature is for the human spirit to seek knowledge and its role is paradoxically to enable the human spirit to seek knowledge.

This is where there is an interface with the divine - where the human spirit manifests itself in purposeful action. Every instance where there is purposeful action is such an interface with the divine. Regardless of how far along the path of social evolution, whether culturally advanced or barbaric, the human actions that begin the economic processes are expressions of the human spirit.

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Dynamic Interplay Between Unity and Justice.

There is a vibrant and dynamic interplay between unity and justice. They are part of the symbiotic nature that comes from human cooperation. There is constant motion in this interplay since we are always learning more about ourselves and others.

Similar to the condition of disequilibrium - where there is perpetual give and take - the forces of unity and justice are 'alive' and active and ever-changing. Dissimilar to the strong tendency that always drives the economy towards a center called equilibrium (functioning much like gravity), the poles of unity and justice advance onward towards a horizon just like our galaxy speeds through space.

In the divine economy model, all of the foundational economic elements are irresistibly drawn by equilibrium forces towards a center designated as the 'divine economy' but the poles of the model - unity and justice - remain impervious to this centering tendency. The force that the poles of unity and justice answer to is 'external' and in a ever-advancing direction.

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Law and Order Go Hand in Hand.

Law and order go hand in hand. Implied in order is an operational practice, one that inherently guides people individually and at a higher, more cooperative level. Implied in law is a truth that defines and describes the outcome with a high degree of certainty. The causal relationship is strongly from law towards order.

The most basic right from which springs all others is the property right, defined broadly enough to include the human being. Laws that protect property rights (which are essentially human rights) serve to bring about the divine economy!

When money is counterfeited it violates someone's property or someone's title to property and this is where the practical side of law comes into play - law is there to protect against injustice, such as counterfeiting by governments or individuals.

The divine economy model shows that by violating the foundational element of law (property right/human right), it leads to the atrophy of order, it squelches the human spirit, and it diminishes the transformative power given to us by a Loving Creator.

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Subjectivism is Compatible with Disequilibrium.

One of the most powerful ways to describe the tendency towards equilibrium is to compare it to the desire and attempts of the soul to gain the Presence of God. It is the ultimate and constant goal of the soul. In like manner the economy is always in a state of disequilibrium constantly tending towards equilibrium.

There is nothing wrong with being in a state of disequilibrium since it is the real condition of the world. We do not have perfect knowledge of the present or of the future, nor do we have the means to make it available instantly to everyone everywhere, hence there is disequilibrium.

Recognizing disequilibrium as the 'the way of the world' does not prevent scientific exploration or discovery provided an appropriate methodology is used. In the divine economy model it is crystal clear that subjectivism is compatible with disequilibrium.

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